July 30, 2018

US GDP Hits 4.1% Growth Rate in Second Quarter

The left points out that much of the economic growth is a continuation of the trend under President Obama, and thinks the effects of the Trump administration’s policies will be short-lived.

The right sees the growth numbers as evidence that GOP policies are working.

...

“In a given quarter, the economy exceeded 4 percent annual growth four times during the Obama administration...The jobless rate was 7.8 percent when President Barack Obama took office in January 2009, and was 4.8 percent when he turned over the reins to Mr. Trump...Gross domestic product has risen every year for the past nine years.”

Meanwhile, “Trump's claim that ‘we're going to go a lot higher than these numbers’ conflicts with the predictions of most bank and Federal Reserve economists, who forecast that growth will slow in 2019 and 2020. ‘This is not sustainable,’ said KC Mathews, chief investment officer at Kansas City-based UMB Bank.”

CNN

“Businesses freaking out about Trump’s trade war likely pulled forward some of their activity. That is, as Morgan Stanley chief U.S. economist Ellen Zentner puts it, they ‘doomsday prepped’ by stockpiling raw materials, intermediate goods and finished products before tariffs raised costs on all those things...We should expect a reversal later this year, as buyers run down their existing inventory rather than place new orders.”

Lastly, “it is still too early to gauge the ultimate impact of the tax cuts but there are worrying signs that the package, meant to spur investment and hiring, has instead gone straight into the pockets of investors...wage growth has remained lackluster, a trend that has continued unabated since the end of the recession and has so far been unaffected by the Trump presidency...‘Low wages are still the biggest puzzle in this economy.’”

The Guardian

The right sees the growth numbers as evidence that GOP policies are working.

“Lowering taxes and decreasing regulation has had powerful effects on growth over long periods of time. Taxes have a very important impact on employment, jobs, output and growth. An economy quite simply cannot be taxed into prosperity. The tax cuts signed by Trump stand in stark contrast to the tax increases under Obama.”

The Hill

to have exported anywhere near enough volume to budge GDP noticeably in the second quarter, nor are there buyers for that many beans...

[In addition] the USDA reports soybean exports weekly and you can easily confirm that exports this year are running slightly behind last year’s pace.”

Forbes

Furthermore, “there are reasons to think that a 3% growth pace can continue with the right policies. The investment boom will drive productivity gains and job creation that will flow to higher wages and lift consumer spending. Inventories will have to be replenished and new household formation is increasing again, which should help housing demand.”

Wall Street Journal

“The question isn’t why economic growth has been so robust over the past 15 months. It is why so many left-of-center commentators and number-crunchers were so spectacularly wrong. Many pundits did not entertain the possibility of faster growth because they favored policies that aimed for redistribution of wealth rather than its creation.”